Litigation: Effective use of early case assessment

Legal spend on litigation, through both indemnity and defense dollars, is constantly scrutinized by management. When approaching in-house legal on the topic, they often ask, “How do we manage these numbers better?” or “How do we get these numbers down without sacrificing results?” Development and consistent implementation of an early case assessment protocol is a solution that can be part of the answer to both questions.

What is early case assessment (ECA)? As a best practice, ECA applies business discipline to create a proactive case management approach designed to comprehensively investigate a dispute within the first 60 to 120 days in an effort to enable counsel to evaluate the matter, assess actual risk, and develop a comprehensive litigation strategy and settlement plan (if appropriate). Straight forward in concept, the development and implementation of an ECA protocol can be a challenge, particularly when dealing with multiple outside counsel. When done with regularity and consistency, however, many companies have seen proven results in the form of faster and better resolutions along with reductions in docket and legal defense costs.

Development of an ECA protocol is a collaborative process with input being sought from in-house colleagues, trusted outside counsel familiar with the dispute or type of dispute at issue, and others as needed. Although many aspects of the ECA are typically handled by outside counsel, it is important for in-house counsel to be involved in implementing and understanding the protocol, as it will enable in-house counsel to identify aspects that can be handled internally and to better manage and evaluate its outside counsel with respect to tasks assigned to them. A checklist of the anticipated steps to be taken in the ECA process can serve as a useful guide. The steps on that checklist should include:

1. Initial fact investigation: Upon first notice of a dispute, it is important to ascertain the who, what, when, why and how of the case, and to determine where there are gaps in information. Understanding the opposing party’s position as stated in any legal pleadings and demand letters, identifying key witnesses and evidence, conducting witness interviews, analyzing key evidence, determining whether there are any potential spoliation issues, and developing a dispute time line should be the target deliverables at this stage. Thoroughness and objectivity are critical because the facts identified here inform all other decisions moving forward.

2. Identify and organize issues: Consideration to both factual and procedural issues and their potential legal ramifications should be given at this point. Factual issues go to the core of the dispute. Evaluating the legal arguments (even to the point of looking at what substantive jury charges would be given on either side) puts one in a better position to evaluate the strengths and weaknesses of the available facts. This also helps to guide future planning of the case with respect to development of supporting evidence. One helpful exercise is to identify a top 5 list: the top 5 best and worst documents and witnesses for each side. This exercise will help focus the strategy of the case at later stages in the ECA process. Procedural issues (i.e. exhaustion of remedies, pre-suit notice, and jurisdiction) are also important to evaluate during this early phase of ECA, because many are time sensitive and have significant potential to affect overall strategy. Once identified, these issues should be prioritized for purposes of further research.

3. Prepare an overview: Preparing an overview of the facts and issues serves as base camp for assessing value and developing the ultimate strategy for moving forward. In terms of content, the overview is an organized correlation of the facts and evidence to the issues identified. This overview helps to identify gaps that either require further investigation and research, or the remaining gaps that simply need to be considered when assessing value and developing strategy.

4. Assess dispute value: Being able to intelligently assess the true value of a case as a whole is a key goal of the preceding steps. In this phase, consideration must be given not only to the strength of the legal and procedural arguments, but also to the actual damages sustained, the applicable laws on and availability of apportionment, the availability of exemplary damages, the capabilities of the opponent, and the venue.

5. Assess settlement value: This step often gets overlooked and lumped in with the assessment of dispute value. However, it is helpful to the development of the overall settlement strategy to separate these two and understand why settlement value is often very different than dispute value. In assessing settlement value, it is important to consider factors that have nothing to do with the value of the case itself. These factors will include, among other things, the time, expense and likelihood of success at various stages of the dispute (be it through procedural or factual application), the likelihood of ultimate success, and the impact a negative verdict might have on the company.

6. Develop strategy: With the facts, the law, and values in hand, both in-house and outside counsel will be in a position to make an informed decision regarding next steps. Having prioritized the factual and procedural issues, one can develop a comprehensive discovery plan that focuses on the core issues and eliminates waste associated with chasing tangential issues. At the same time, having assessed the overall dispute and settlement value of the case, one can also develop a settlement and trial plan that allows the company to make informed decisions regarding when to seek resolution and at what price point.

Consistent implementation and application of one’s ECA protocol is just as important as development of the protocol itself. When doing so, in-house counsel should consider the type and frequency of disputes for which the protocol is being developed, the capacity of the company’s current in-house team to manage portions of the protocol, and the capabilities of the company’s outside counsel assigned to implement the protocol. Accessibility to information, and the quality of that information should also be considered.

Whether portions of the protocol are being handled in-house or by outside counsel, the goal should be to establish all tasks needed to complete the assessment, and to clearly define team members’ roles while utilizing the lowest cost person who is most capable of handling certain tasks. Additionally, ensuring that all team members know the purpose of the protocol and have the capacity for completing the tasks assigned are critical to making the protocol performed as designed.

Fundamental to the success of an early case assessment is focused thoroughness (avoiding time spent chasing red herrings) and a commitment to the process. At the core of the process is a focus on objectivity. The entire team should be reminded that the goal is not to “plan” or “win” the case, that part comes later. Evaluating the facts and evidence objectively throughout the ECA process is what lays the groundwork for successful implementation of the litigation strategy. If developed and implemented properly, an ECA protocol can be an effective way to manage and, ultimately, reduce litigation driven legal spend.